A tour operator’s bold commercial move is challenging the efficiency of the customized travel booking process as tumultuous travel back tests lead to a shortage of staff at companies.
Tour operator Authentic Vacations has begun asking for a refundable $99 deposit from direct customers or travel advisors who wish to appoint a representative to set up their itinerary.
The change was introduced as a way to weed out shoppers who would not stick to reservations and to enable employees to focus on real inquiries that turned into sales.
Industry experts say it’s an unfamiliar move for a tour operator, one that takes a page out of a travel advisor’s guide: Agencies and advisors have long been charging fees for service so they don’t waste their time on unserious inquiries. Travel Weekly’s 2021 travel industry survey found that the revenue share from service charges increased from 18% to 27% from 2018 to 2020.
However, in the dedicated cruise segment, service charges are uncommon. But with tour operators’ call centers overwhelmed with nearly unprecedented amounts of staff, leading to long wait times, operators may reconsider the status quo.
Authentic Vacations launched the deposit in December, along with a $49 fee to use an online self-service itinerary builder called Trip Planner, when staff cuts due to the pandemic forced it to recheck its business.
After losing 50% of his team at the height of the pandemic, and with front-line sales teams down 65%, CEO Simon Russell realized they would do more work with fewer people when travel eventually resumed.
Like most dedicated travel companies, Authentic Vacations employees spent their time in the pre-pandemic period serving one of two types of customers through its call centers: “spectators” and “bookers,” Russell said.
“Even with the best marketing, a high repeat rate, and a highly experienced team, the best conversion you’ll get is probably 30%,” Russell said. “This means that 70% of your work is wasted, and you will not earn any income from it.”
The time spent by viewers, as opposed to the money earned from booking, is becoming more and more difficult for the company to ignore. In late 2020, Authentic Vacations began an 18-month re-engineering of its approach to booking inquiries.
“We had nothing to lose,” Russell said. “We had time for our partners to get used to a different way of working before things got back to normal.”
Today, the company’s booking numbers are quickly recovering to 2019 levels.
“In a busy month before Covid, we were getting an average of 1,000 inquiries a month, converting 15% of them and getting 150 bookings,” Russell said. “With our new model, in a similar month, we are now dealing with just 200 inquiries to get the same 150 bookings. [We’re] We are able to take more time answering genuine inquiries, as they are all now original, and put together better journeys for our customers.”
Doubt about the business model
Knowing that rising demand and consumer willingness to splurge may not last, combined with the need to recover from the economic wounds of the pandemic, companies are more aware than ever of the value of their workers’ time.
However, in response to an inquiry sent by the USTOA and ASTA to their members on behalf of Travel Weekly, many tour companies said that collecting deposits up front for time spent crafting a trip is a very risky business model, one they had not considered.
“At EF Go Ahead Tours, we will never ask for a deposit for any potential traveler to speak with any of our tour advisors,” said Jessica Trammell, EF Vice President of Marketing, adding that the company has a team dedicated to working one-on-one with “anyone Interested in a travel experience?
Goway Travel’s director of sales, Renee Stanton-Defaria, said that while it may be “a model that other companies will follow,” Goway has no plans to do so. In fact, she said booking inquiry conversion rates are doing better now than they did in 2019.
“We believe this is due to our extensive in-house training and onboarding process that we do with our travel advisors before we even begin to quote,” she said.
Cathy Reiter, president of Celtic Tours, said the company sees its fair share of window shoppers despite its model, which collects deposits as soon as someone wants to go ahead with a quote.
“About 40% never reach active hold status,” the writer said. “Unfortunately, we still have a lot of work to do with no return. We are somewhat in a bind when it comes to streamlining the work; if we reduce our services until the deposits are paid, the travel agent will just look for another operator, or the complaints will come in. So it’s hard dealing with it. “
However, travel consultants say they charge this fee for the cost of their time.
“I’ve been paid by the hour since I started 15 years ago,” said Nicole LeBlanc, owner of custom travel agency Moon Voyage Travel. “All work before, during and after the trip is subject to this fee, because my professional experience and time are valuable.”